State-run Taiwan Cooperative Financial Holding Co (TCFH, 合庫金控) yesterday said profit growth momentum might extend throughout this year on the back of stronger overseas operations and wealth management business.
The bank-focused conglomerate gave the guidance during an earnings conference, where it announced net profit of NT$8.49 billion (US$270.68 million) for the first six months of this year, with earnings per share of NT$0.66.
The results represented an increase of 4.88 percent in earnings from a year earlier, with all subsidiaries generating profits.
“We plan to open two new banking outlets in Cambodia and Laos by the end of this year, raising the total number of foreign outlets to 24 and allowing them to be a bigger revenue driver,” TCFH president Chen Mei-tsu (陳美足) told investors during a Web cast.
As of June, overseas operations generated 35.29 percent of pre-tax income, up 5.03 percent from a year earlier, company data showed.
The financial holding firm has sought to tap foreign currency-based businesses this year as part of an effort to diversify its sources of income, which depend heavily on interest income from the domestic market.
The strategy adjustment appears to have paid off: Foreign-currency loans rose 20 percent to the equivalent of NT$285.6 billion in the first half of the year, while foreign-currency deposits picked up 5 percent to NT$391 billion.
Foreign-currency lending bears higher yields than local-currency operations owing to low borrowing costs in Taiwan.
The conglomerate’s main banking subsidiary, Taiwan Cooperative Bank (合庫銀行), has supported the government’s New Southbound Policy, explaining why lending soared 26.44 percent annually in Southeast Asia and Australia in the first six months.
“We will continue to gain new customers in those markets and at home, as the government has approved over 100 investment applications from local companies based abroad,” Chen said.
The conglomerate would reach out to customers who need capital to buy land and build factories and offices, a TCFH official said.
Wealth management would be another bright spot after seeing a 7.95 percent increase, accounting for 51.24 percent of total fee income in the first half, the official said.
Savings-like insurance policies would remain popular ahead of their exit required by the regulator next year, the official said.
Despite its business improvement, net interest margin declined 4 basis points from six months earlier and might drop lower in the second half, as central banks worldwide tend to cut interest rates to support economic growth, the official said.
The conglomerate would also seek to stay competitive and relevant as the advent of Web-only banks is reshaping the banking industry, Chen said, adding that the banking arm has offered a 1.2 percent interest rate for demand savings of NT$120,000 deposited over the Internet to encourage digital transactions.
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